EZchip Buys Tilera

MADISON, Wis. — In hopes of riding the growing build-out demands for a broad range of networks and datacenters, EZchip Semiconductor, an Israel-based network processor company, announced Tuesday, July 1, that it will acquire Tilera Corporation, a privately held US chip company that specializes in multicore processors.

The two companies have signed a definitive agreement. They expected to close the deal in the third quarter, according to Eli Fruchter, CEO of EZchip.

Linley Group principal analyst Bob Wheeler told EE Times that the combined company will be "a credible new competitor to Broadcom and Cavium." Both Broadcom and Cavium have dominated designs for high-end multicore processors. "Just how big a threat EZchip becomes, however, will largely depend on its roadmap," he added.

EZchip will pay Tilera's stockholders up to $130 million in cash, of which $50 million is payable at closing. Up to an additional $80 million is tied to future performance milestones.

During the conference call Tuesday, Fruchter noted that the combined company plans to integrate "Tilera's control and data plane standard processors known for the highest core count and lowest power dissipation" with "EZchip's accelerator that has the highest performance." He said, "This will give us a lot more differentiated products."

Fruchter, however, declined to discuss specifics on the new company's product roadmap, including what architecture the company will be using in future products.

Blurring line The two companies' technologies are regarded as "highly complementary" by market analysts. Linley Group's Wheeler said, "EZchip has specialized in high-performance packet processing but has lacked the ease-of-programming associated with multicore processors. Tilera is a pioneer in massive multicore designs that run SMP Linux and support standard tools such as GCC."

The key to the deal is a changing market landscape for network processing units (NPUs) and multicore CPUs. Although both EZchip and Tilera have developed complementary product lines and curved out separate markets, the line between the two product categories has begun to disappear.

For example, EZchip's NPUs are designed for high-end carriers and datacenter equipment in which a high-performance data-plane-only NPU is required. In contrast, Tilera's multicore CPUs serve for a broad range of datacenter systems in which both data-plane and control-plane run on the CPU.

Jim McGregor, founder and principal analyst at Tirias Research, agreed. "There are many companies vying to compete in networking ranging from traditional server processor vendors to NPU vendors." The definition of what classifies as an NPU, however, is rather loose, McGregor noted.

The bottom line for EZchip is that it badly needs to increase its scale and addressable market. As Wheeler pointed out, "EZchip is highly profitable but its growth prospects were limited by the size of the merchant market for high-end NPUs."

Attractive to EZchip are said to be Tilera's products, customers, revenues and more than 100 patents. More specifically, by acquiring Tilera, EZchip hopes to add datacenter and cloud networks to its own target markets.

EZchip also covets more than 100 Tilera customers in various market segments. Brocade, Check Point and Cisco are among those clients identified during the conference call.

It's important to point out that Tilera designs not only high-performance multicore processors but also develops intelligent network interface cards and white-box appliances for datacenter networking equipment.

During the call, Devesh Garg, the CEO of Tilera, explained, "We develop solutions specific to an end customer's needs." He added, "Although physical manifestations may differ, the key values – scalable platform, low power dissipation, and standard Linux or C and C++ programming environment -- reside in each of our products." After the acquisition, Gang will serve as EZchip's President in charge of all US operations.

EZchip's Fruchter boasted that by acquiring Tilera, EZchip will double its total available market to $2 billion, consisting of NPUs, multicore CPUs, smart network adapters and appliances, for the datacenter and telecom markets.

However, it remains to be seen just how successful the merger will be. While acknowledging "some synergies" between the two companies, McGregor said that the challenge is "to define the next generation networks from the new edge devices to the core, while providing competitive solutions for each segment of the network."

Product wasn't bad, but it didn't get traction against Broadcom (XLR/XLP/XLP2) or Cavium (Octeon1/2/3).

Some of that might have been that their mesh architecture meant it was substantially more difficult to use in a packet-processing context: Octeon and XLP had no issues with thread/core placement; for TileGX getting decent latency was hamstrung by the I/O sub-system to start, and then you had to consider the routing latency across the mesh when positioning threads.

Their "developer friendliness" was also perhaps an issue. They did the right thing in making the basic Linux and compiler ports open, but their eval systems were expensive and hard to get. The advantages of their Zero-Overhead Linux were whittled away by recent advances in the stock kernel too.

Still, they've haven't had a lot of runway with the Gx chips. With the life-extension from EZchip, they might start to see more success, even if that doesn't benefit the original investors and shareholders. If they follow the herd down the low-power datacenter path, their architecture might scale better to higher core-counts than their competitors, particularly if they start putting some I/O into the middle of the mesh. They might need to switch out the instruction set though ... (sigh)

@gsmd, thanks for the ARM shout out!. Given Tilera's approach of aggregating ALOT of modest level performance CPUs the A53 would probably represent a better approach.

I think this is a great purchase for EZChip, especially at that pricing level. Their use of a proprietary processor architecture forced a path for developing turnkey solutions. In that regard, Tilera does have some design wins at a number very significant customers including communications and embedded. The technology is very credible technically. The combination of Tilera's interconnect EZchip's NPUs throws up some interesting possibilities for next generation products.

Tilera lured Andrew Rava (ex Cavium VP sales) out of retirement, appearing this year on the Tilera management page. The purchase by EZChip may, therefore, represent a very recent change of company strategy.

As a hardware guy, it is disappointing to see an exit like this. It is hard for hardware oriented start-ups to raise VC money and this type of transaction doesn't help change that situation. This industry, particularly in the US, has thrived on hardware innovation initiated in small companies and I worry about the "so whats" in the long term.